Procedures for Trust Deed Foreclosures in Missouri
Individual states exercise the rights to govern foreclosure procedures within their jurisdictions. A lender attempting to foreclose on a property must adhere to the state guidelines. Trust deeds, or deeds of trust, act as a security instrument the lender requires the borrower to sign when a mortgage loan is obtained. This document places the property in a trust until the loan is paid in full. Trust deeds are used in title theory states, such as Missouri. Foreclosure procedures for trust deeds are different than mortgages.
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Power of Sale
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Trust deeds for Missouri properties generally contain a power of sale clause. This verbiage basically states that the lender is not required to go through the court system to begin foreclosure in the event the borrower defaults on the loan. By signing the deed of trust, the borrower agrees to the terms set forth in the trust deed. If for some reason a mortgage is signed in Missouri, the lender will most likely need to proceed with the foreclosure with the help of the judicial system.
Notice of Sale
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Once the lender decides to initiate foreclosure, the trustee drafts a notice of sale. In Missouri, specific information must be disclosed on the notice. This includes the names of the parties involved, the current date, the time and date of the sale, and the price. Additionally, the recording information of the trust deed should be listed, along with any special terms of the sale. The notice must be delivered, via mail, to the borrower within 20 days of the sale date. Also, the trustee is responsible for advertising the sale for at least 4 consecutive weeks in a local newspaper or other form of publication.
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Foreclosure Sale
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The foreclosure sale proceeds in auction format. The sale must take place in the county in which the property lies between the hours of 9 a.m. and 5 p.m. The highest bidder wins ownership to the property. Bidders should come prepared to submit at least a 10 percent down-payment in cash at the sale. The remainder of the sales price must be paid up front by the end of business on the day of the sale. At this time, the trustee can sign a deed granting ownership to the winner.
Redemption
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Missouri law allows for the borrower to redeem the property at any time before the foreclosure sale takes place. The borrower must pay, in full, the lender the loan balance, plus interest and fees. Once the property is sold at auction to a third party, the original borrowers do not have a right to redeem. However, the borrower is allowed to bid on and purchase their property at the auction. Doing this involves a little more work than simply bidding and paying in full. A written notice to the trustee is required before the sale, as well as posting a court-approved bond for the amount requested by the trustee. If all requirements are met, the borrower can pay back the total amount owed within one year.
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